The Trump Blog

Do you love your job, your boss, and all of your co-workers? If not, you are probably not among the ranks of the self-employed. 

Self-employed individuals are passionate about their business and work tirelessly to make it a success. When you work for yourself you are not concerned with the time clock and could care less about how many hours per week you are at the office. You do this because you are expending time to grow YOUR business. Make no mistake, you WILL be working more, not less, than you were before. When you aren’t working “in” the business, you will find yourself working “on” the business. It will likely keep you up at night and occupy your free time so you can figure out ways to grow and compete in your industry. 

How nice would it be to not have to tip-toe around a boss who doesn’t appreciate your efforts, take credit for your successes and pass blame for his/her mistakes? I will tell you...it’s completely liberating! Every morning you will wake up with only one to please...your customer! Your only focus will need to be on how to attract more and make the ones you have happy enough to come back to you. It sounds easy enough except for the fact that everyone else in your industry has the same game plan. That’s the beautiful challenge in it. You must use every ounce of your creative being to make your company prosper with only you to take credit for the wins or blame yourself for the losses. I would bet you don’t get to do that on your day job now.

Another important decision to make is with whom you decide to surround yourself to help make your company operate. In a small company, it is imperative to have superstars! The reason is because that person represents an enormous fraction of your company as a whole and you can’t afford to expose your customers to “average” or “below-average” support staff. If you can’t find a superstar, then hire a “temp” or do the work yourself till you do.   It’s hard to get customers and even harder to get them back! 

I encourage you to figure out what it is in your life you want to be when you grow up and then grow up. Do your research carefully and then create a job for yourself. It doesn’t have to necessarily replace your current job at first. You can start some businesses in your free time after work until you can support yourself enough to resign and start your career.

Have you noticed the ridiculous price of diesel fuel lately? It’s more than $4/ gallon at my gas station and I am frankly baffled as to why. It is cheaper to manufacture than any of the other grades of auto gasoline and I am predicting additional potentially severe macroeconomic effects this will have on the goods we buy. 

At first glance you may not pay attention to the price tag but I assure you, it is affecting you more than you realize. The reason is because of how our goods are distributed. We know all those big trucks carry the vital consumer commodities necessary to sustain our economy. Since the distribution costs of these goods have doubled in a short period of time, it only makes sense that we are going to feel the pinch at the retail levels. I see that upward pressures to raise prices have already begun at the grocery stores and travel industries. Airlines have been “surcharging” for soaring jet fuel costs for the past couple of years I look for similar trickle down in the stores. 

So what can we do about it? I think increasing production in some of the other areas such as Canada and S. America could help the fears of “lack of supply” and drive prices back to reasonable levels. Also, a continued push for alternative fuel sources should be near the top of the list so we can reduce our dependence on foreign oil. 

What are some other measures we can take to curb fuel prices thus keeping inflation from getting out of control?

I recently read a “special report” published by the Tax Association boastfully declaring April 23^rd as the official date that most will have earned enough income to pay their share of all necessary federal, state and local taxes. The study shows that due to the expected impacts of the economic stimulus package, this date has been moved up by three days after having moved later each of the last four years.  Well isn’t that profound? 

Who would have thought that the government returning billions of dollars to its rightful owners would shorten the number of days that tax-payers would need to work to contribute? While I don’t want to seem ungrateful to Uncle Sam, I would like to point out that by taking too much from his citizens each year, he has created this need to “stimulate” by giving back. 

So the 23^rd is the day Americans can effectively say they are working to provide for themselves and their families rather than paying for government.  Today, I want to talk about what we can do to move that date even earlier each year. It is a well know fact that one of the main tax advantages we receive is through the benefit of homeownership. 

100% of the interest and property taxes we pay for the roofs over our heads is tax deductible and in many cases, so is any associated mortgage insurance. So the first thing one should do is to make sure they are taking advantage of that benefit. It can return thousands of dollars back to its rightful owners and move their “tax freedom day” up by several days. It is also a key reason that you should consider making your first real estate investment you own home. This is why it makes sense to buy a first home as soon as you can do so in a financially responsible way.

Another way to achieve “freedom” is through real estate investment. Not only can one derive an income stream from owning real estate, the government allows the asset to be depreciated much like any other piece of capital equipment owned in a business. Take advantage of the “loopholes” provided by the government to minimize taxes owed each year and since “a penny saved is a penny earned”, maybe you can shave off a few more weeks of working for the government. 

It’s a well known fact that most Americans invest their money in American-based companies and securities rather than looking to do so abroad.  In part, this is due to a lack of knowledge about how to go about doing so and what the risk/rewards are. The purpose of this writing is to bring about awareness to a strategy being used successfully by many US investors (but not nearly enough). This type of investing can act as a nice insurance policy against the falling value of the US dollar and provide a quality return-on-investment with very little risk. 

In buying foreign bonds, you are investing in a safe but predictable investment vehicle designed to protect your principal by minimizing market risk exposures which are prevalent in most international economies. For most US investor amateurs, this is a practice they use in their own portfolios but only with domestic bonds. This practice of “hedging” with bonds is just another way to have some of your money invested safely in case of catastrophe to the equity markets. The only real risk to these types of investments is that as the dollar strengthens against the foreign exchange rate, the net return on these foreign returns gets proportionately diminished.

In order to be able to jump into foreign bond investing, you will need to either do your research and set up investment accounts in the foreign countries with which you choose to invest, or contact a broker dealer and consult with an agent who has experience in that area. They can certainly get you started in the right direction by identifying which bonds are paying the best yields and over the most favorable time periods.

One specific example I can point to right now is the consistently strong Australian Dollar in the form of Australian Bonds which is paying a very safe 6+ percent yield and was recently as high a 7.5%.   Note that these are rates you can lock in for a little as two years. Now I am not saying to dump all your money into Australian bonds, just that you may want to have a real good sit down with you advisor about making foreign bonds one component of a building a balanced investing portfolio. 

So what are you thoughts? Do you use foreign bonds or other external investments to derisively your investment allocations? What future do you see for the relative strength of the dollar over the next two years and beyond?

Today I got to hear Fed Reserve chairman Bernanke tell Congress the hard truth about our economy and the direction things could be heading. With GNP being virtually flat and consumer confidence at tremendously low levels, that lovely 3 syllable word called “recession” was uttered as a distinct possibility as to what could be in store. The definition of a recession is two or more consecutive quarters of zero to negative economic growth and I think we just banked the first one. 

Bernanke further explained that until the effects of the economic stimulus package could be felt and measured, we could possibly have a second quarter commensurate with the first. On a positive note, he thinks the government’s approach to intervention of a recession should prove effective by later in this year. The tax rebates, in addition to the slashing of interest rates and a generous multi-billion dollar gift to the banking industry, should produce the kind of measured results the Fed is hoping for. Mr. Bernanke spoke of a moderation of the skyrocketing oil prices and therefore keeping fuel prices and food transports at a steady level. He wouldn’t comment on the possibility of another rate cut later this April.

What I didn’t hear was how we were going to have to pay for this later. We are adding to an already seemingly insurmountable budget deficit. Where is all of this money going to come from? If we had all of this extra money lying around, perhaps we should have returned it back to the American people a long time ago or applied it to our massive and growing debt. Would that have prevented some of the problems we are now facing?

One thing is clear about our economy we can’t simply sit back and pretend blue skies will always return. As Mr. Trump would tell you now is not the time to convert all your assets to cash and head for the hills, however, it may be time to make some adjustments. Such as starting to invest in real estate, with hard work and creativity some of the best deals ever are available right now. Perhaps now is the time to really start working on that great entrepreneurial initiative you have been kicking around in your head for a while. 

My question is what are you doing to prepare for what we must call uncertain times? How are you improving your knowledge, position and budget to take advantage of what will be a hard time for some and an opportunity for others? Do you see opportunity or do you see tough times? Remember perception is reality.

Unless you live under a rock, by now you are aware that “lower and middle class” Americans will soon be receiving some free money in the mail after filing their 2007 returns.  The amount of the checks will vary depending on marital status, number of dependents and current income level.  (exact parameters can be found at http://www.house.gov/fossella/Constituent/stimulus.htm).  What I want to address today are some of the macro-economic effects associated with this type of “stimulus”.

The purpose of this move proposed by the Bush administration and approved by Congress is to give consumers some spending money in hopes they will do what they usually do when they get extra money...spend it!  To accomplish this every single tax payer that earns less then 75,000 dollars annually can expect a rebate check of 600 dollars.  Married couples filing jointly can expect a 1200 dollar rebate check if their combined income is less then 150,000 dollars a year.

This will create an increase in demand and the “multiplier effect” of each dollar spent can create anywhere from a $2-4 economic benefit to our economy.   When consumers buy “domestic” goods and services, this creates jobs (or saves jobs from being lost), promotes production and manufacturing which helps the wealthy and creates tax revenue on the local and state government level.  It’s a win-win-win for all parties involved but is it enough?

What happens if Americans buy imported goods such as new foreign cars or travel abroad?  What if they save this money rather than spend it?  A stimulus is by design a catalyst to give a boost to the economy within a short amount of time.  What is the government doing to increase demand for our products both domestically and abroad?  We need to figure out how we can sustain this surge in demand, increase employment within our borders and do so without the government having to hand out money to facilitate.  What are you thoughts on both the long term economic issues we currently face and the Tax Rebate stimulus package?

As of the close of business on Friday last week, the price of gold had risen to a record high $1015 per ounce! A look at the chart of this commodities 5 year history and you might wish you bought some bullion bricks for yourself back then. Gold has more than tripled in value in the past 60 months and it may be all by accident. 

It seems that since banks quit using gold to back up their monetary supply, the uses and demand for gold has greatly diminished. It’s not used all that much for jewelry either as other metals such as silver and platinum have pushed their way to the front of the line in terms of demand. One reason for this “run” on gold has less to do with a demand for it’s use and more to do with investor’s fears of the financial markets and the difficulties of our economy.  

Investors are shifting their attentions to more tangible and fungible commodities so that as the “Bear Stearns” of Wall Street stumble and fumble, they can feel a little safer in the fact that their investments are more secure than paper stocks.   They have a true asset that won’t “tarnish” their portfolios as our nation continues to inch closer to recession.  After all the government may not always step in and bail our companies like Bear Stearns with 30 Billion Dollars.

Demand for this precious metal is on the rise, but seemingly only to give investors piece of mind and something to store under their mattress and not for any great plan or use. I am not sure how long this run will continue and personally feel that profit taking will occur as soon as prices begin to level off or drop.

What do you think about the current market turmoil and gold in general? Does it have a solid place in your financial planning? What about the Bear Stearns bail out, should our government be in that business?